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Financial Advice for New Military Spouses (and the rest of us)

10 August 2022

This post may contain affiliate links, from which I may earn revenue to support this free site. All opinions are my own, and I only promote products that I use and love!

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New military spouses have a ton to learn. Make sure these key financial issues are on the list.I’m fortunate enough to sometimes talk to some new, or new-ish, military spouses. There’s so much to know about money in general, and money and the military can be particularly tricky.  I usually have a limited amount of time, and I struggle to decide on the most important topics to discuss. I want to tell them everything that I wish I knew 20-plus years ago.

Here are some of the things I frequently include:

Learn, Learn, and Learn About Money

Military pay and benefits can seem complicated, but there are a world of resources to help you understand them. Installation family readiness centers offer classes on all sorts of topics. There are also organized spouse training programs like the Navy’s Compass program or Army Family Team Building.

In addition to base resources, the internet can help you learn just about anything you want to know. There are blogs like this, Facebook groups, and online forums for talking to other military family members.

Here are some key skills to know:

How to read a Leave and Earnings Statement (LES). It’s the military equivalent of a pay stub, and it explains all the pays, allowances, and deductions.

How pay raises work

How bonuses get taxed

Fund Your Retirement

Military spouses need their own retirement savings. Unfortunately, military spouses face career challenges, and that can make it hard to save for retirement. If you are working, be sure to contribute to any available tax-advantaged retirement plans like a 401(k). Whether you are working or not, contribute to an Individual Retirement Arrangement. If you’ve maxed out those options, consider starting a small business just to open a SEP or Simple IRA or Solo 401(k).  It can be hard when you’re on a limited income, but strive to save at least a little bit each month.

Military spouses need their own retirement savings. Click To Tweet

SGLI and FSGLI

Be sure your spouse and you are both enrolled in the Servicemember’s Group Life Insurance (SGLI) and Family SGLI (FSGLI) programs. This life insurance is incredibly cheap. Not sure if your spouse is enrolled? Check their Leave and Earnings Statement (LES) to see if premiums are being deducted. You should also ask your spouse to check their details on the SGLI Online Enrollment System to verify that the right beneficiaries are listed.

Keep Your Own Credit

I have nothing against spouses comingling all their money, but there is a lot of value in maintaining your own credit cards. First, it’s helpful in an emergency. If one partner loses their wallet or has their identity stolen, all your sources of credit won’t be frozen. Which is doubly helpful if you need a credit card to order a replacement driver’s license because it was in the same wallet with the credit cards that were stolen.

Second, the statistics say that someday you’ll be single, whether through divorce or death. Navigating that new life plan is hard enough without being credit-less. You want to have your own credit.

Thrift Savings Plan

Encourage your spouse to start contributing to the Thrift Savings Plan (TSP) right now, and increase their contributions with each pay raise and promotion. The sooner he or she starts, the more they’ll be able to accumulate in that retirement account. And if they are in the Blended Retirement System, they’ll get matching funds from the government added to their account.

Taxes and Domicile

Military families have some special tax considerations, including the ability to maintain a state of legal residence (domicile) somewhere besides where you’re stationed.  New spouses should understand how the Military Spouses Residency Relief Act (MSRRA) modifies the Servicemembers Civil Relief Act, and when it means they can retain an old state of legal residence, and when they can’t.

 

Mystery Money

At some point in your spouse’s military career, they will have a paycheck that is too large. Possibly even huge. You should assume that this is a mistake. Whatever you do, don’t spend it. Not even a teeny tiny bit. Move this money to a separate savings account until the military decides that it wants the money back.

Certainly, check the LES and try to figure out what has happened. Getting to the finance people quickly may prevent an overpayment on the next check. But just leave the money aside from your regular money. When the military decides that they want to be repaid, they could take entire paychecks to do so. You’ll be glad you didn’t buy a new sofa, or go to Vegas.

Servicemembers Civil Relief Act

The Servicemembers Civil Relief Act (SCRA) gives military service members and their spouses a variety of legal protections, including terminating a lease early due to deployment or Permanent Change of Station (PCS) move. You’ve got to understand the provisions in order to use them properly.

Transition Fund

I strongly encourage your spouse and you to consider building a transition fund for when they eventually leave the military. Whether they do four years and don’t re-enlist, or stay for a 30-year career, no one stays in the military forever. The transition is typically more expensive than people expect. I hear from way too many people who are panicking because they are leaving the military in two months, have no savings, and have no plan.

Do some quick imaging about what you would need to support your family for six months, and start socking away a little money each paycheck. Your needs will change over time – adding a baby means that fund needs to grow more, but reaching eligibility for military retirement may mean it can shrink.

There are many other important things that military spouses need to learn, but these are the top ones I try to include. Is there something you would put on my list?  What do you wish you had known?

Kate
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8 Comments
Filed Under: Spouse Careers, Taxes

Comments

  1. Kathleen Monagle says

    31 August 2017 at 7:50 pm

    I wish I’d known about the things that would need to be purchased AFTER my first military move: light bulbs that broke in transit, curtains that didn’t fit, spices ruined by storage in hot warehouses, rugs for those odd spaces, little bits of this and that and it all added up. Yes, thrift shops and discount stores saved us some cash. After that first move I always planned for “moving money”.

    Reply
    • Kate Horrell says

      31 August 2017 at 7:57 pm

      So true Kathleen! There is always something, isn’t there?

      Reply
  2. Gerald Zeigler says

    31 August 2017 at 11:47 pm

    After any pay increase, save and/or invest at least half of it each month. You will still be able to enjoy the increase in pay and at some point you will be really thankful you did it.

    Reply
    • Kate Horrell says

      2 September 2017 at 9:20 pm

      Good advice, Gerald!

      Reply
  3. Manda Lynn McVey says

    26 January 2018 at 10:32 am

    Some states, Kentucky specifically, do not allow you to file individual state tax if your spouse has a different state of residency/domicile. And, even though your spouse is filing taxes for their own state of residency, they are required to be listed on your state tax form and it can effect your tax due to Kentucky. Which shouldn’t be a thing. If my spouse already paid taxes to one state, Kentucky shouldn’t be able to try and make us pay more taxes here. It was SO confusing. Not a single tax software program that I found would allow me to file properly either, so I HAD to find a tax professional to help. Which, when stationed as a recruiter, it is hard to find anyone honoring military discounts or providing free services for service members.

    Reply
    • Kate Horrell says

      30 January 2018 at 7:09 am

      Manda, I’m not familiar with the specifics of Kentucky’s tax laws, but in most states you include all income (from both spouses) then the income that is not attributable to that state is taken back out, so that you’re not being double taxed. Kentucky has you back out the military income using the KY Schedule M. Is that not included in your tax return?

      Just as an example, both my husband and I are Florida residents, but we also have to file in Maryland and Virginia because we own houses there. For each state, our entire income is listed, then the income that is attributable to other states is deducted, leaving on the income from that state to be taxed.

      You may find these instructions helpful: http://min.midco.net/stateinstructions/www/kentucky.html

      Reply
      • Manda Lynn McVey says

        30 January 2018 at 10:42 am

        Thanks, Kate. That should help a lot.

        Reply
  4. Lisa R says

    27 May 2022 at 4:59 pm

    I would add investing time to understanding GI Bill benefits, especially the requirements to transfer benefits.

    Lots of people assume they will have transferred benefits, but didn’t go through the process to actually transfer them.

    Reply

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WELCOME!

Hi! I'm Kate! Accredited Financial Counselor®, Navy spouse, and mom of four.

Here at the blog, I talk about the financial issues that affect military families - pay, allowances, and benefits. Plus college stuff, landlording, moving, taxes. We cover a little bit of everything.

My goal is to give you the tools to make the best decisions right now, so you'll be confidently prepared for whatever comes next - whether that's a PCS move, transition to civilian life, or retirement.

So grab a cup of coffee, tea, or whatever makes you happy, and let's get to know each other.

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